Hard fork is coming. What will happen to Bitcoin?
Talks about the segregation of the Bitcoin chain were first seen in March. The main cause of the arguments is the small size of blocks containing transaction data. If the new alternative Bitcoin Cash (BCC) protocol emerges, a typical transaction block will become bigger and it will lead to the increase of transaction speed. But no one knows for sure how this hard fork will happen and will we ever see the blockchain dividing into two, because the decision is made by majority. It is yet unclear how the latter is going to react.
Preparing for hard fork
The main danger during the Bitcoin fork is the loss of private keys. It can occur if one keeps the cryptocurrency funds in the online wallet. Nobody can be sure that the owners and managers of one or another online Bitcoin storage service are going to protect these funds. So, the first thing one must do is to withdraw bitcoins to cold storage – a desktop or, even better, a hardware wallet. A part of owned funds can be left at the exchange in case of significant drop of prices and interesting investment opportunities appear after the fork.
Ideally, every Bitcoin participant will get the same sum of Bitcoin Cash. This is going to happen since BCC is the product of blockchain ledger division. There are, however, some pitfalls: many exchange and wallet sites remained true to the original Bitcoin and explicitly stated that they will not support the possible fork. This means that the BTC owners will not get the same sum of BCC. With absolute certainty. This factor must be clarified with every exchange and wallet service individually.
For example, the Blockchain wallet will not support Bitcoin Cash. This is stated at the company website: “In the event of two separate blockchains after August 1, 2017 we will support the longest chain. As of today, we have no immediate plans to fully support the Bitcoin Cash fork within our main product.” The Poloniex exchange, however, did not give the unambiguous answer to this question: “At this time, we cannot commit to supporting any specific blockchain that may emerge if there is a blockchain split. Even if two viable blockchains emerge, we may or may not support both and will make such a decision only after we are satisfied that we can safely support either blockchain in an enterprise environment.”
The most conservative action here would be to convert bitcoins into some other cryptocurrency or fiat currency. This will indeed ensure the safety of funds but will eliminate even the slightest opportunity to get bitcoin cash and earn more money.
How will the BCC affect the Bitcoin exchange rate?
One of the founders of BitMEX trading platform tells that in the past no one was really interested in Bitcoin forks, so the price of BTC will not drop – or drop slightly.
The BCC price and its correlation with BTC will depend on several factors, e.g. who will mine the new fork. Presently, one big mining pool from China supported the BCC, but there is no certainty in how much are they going to invest in mining it.
Generally, the market participants don’t seem to worry about the possible emergence of BCC.